City of Cleveland v. Cleveland City Railway Company

• Decision Date: 31 May 1904
• Docket Number: No. 255,255
• Citation: 194 U.S. 517,24 S.Ct. 756,48 L.Ed. 1102
• Parties: CITY OF CLEVELAND, Appt. , v. CLEVELAND CITY RAILWAY COMPANY
• Court: U.S. Supreme Court

194 U.S. 517

24 S.Ct. 756

48 L.Ed. 1102

CITY OF CLEVELAND, Appt.,

v CLEVELAND CITY RAILWAY COMPANY.

No. 255.

Argued April 26, 27, 1904.

Decided May 31, 1904.

This suit was brought in the circuit court to restrain the enforcement of an ordinance of the city of Cleveland, passed October, 1898, fixing the rates of fare to be charged by the appellee on a portion of its line of street railroad.

The bill based the right to relief upon two grounds; that is, a violation of the contract clause of the Constitution of the United States, and of the due process clause of the 14th Amendment; the latter because the rates fixed by the ordinance, if enforced, would be confiscatory.

After hearing, a temporary injunction was allowed. The court, in stating its reasons, confined them exclusively to the alleged impairment of the obligations of contracts, and decided that it was unnecessary to consider the rights alleged under the 14th Amendment. 94 Fed. 385.

Both parties thereupon amended their pleadings, so that upon the face of the record the facts concerning the alleged impairment of contract rights appeared as found by the court in awarding the temporary injunction. The bill as amended, however, also reiterated the facts originally claimed to constitute a violation of the due process clause of the 14th Amendment. The pleadings being thus amended, the complainant moved as follows:

The above-named complainant, The Cleveland City Railway Company, now comes and moves the court to enter final decree in its favor as prayed for in the amended bill of complaint herein, adjudging the ordinance in said amended bill of complaint described, entitled 'An Ordinance to Provide for a Diminution of the Rate of Fare under Section 7 of an Ordinance Passed August 25th, 1879, entitled 'An Ordinance Granting a Renewal of Franchise to the Kinsman Street Railroad Company to Reconstruct, Maintain and Operate its Street Railroad in and Through Certain Streets of the City of Cleveland," passed October 17, 1898, to be null and void and of no effect, in that, as appears by the amended bill of complaint and the admissions of the amended answer herein, said ordinance is in violation of the contract obligations existing between the complainant and the defendant herein, and impairs the contract rights of the complainant, in violation of the Constitution of the United States.

'Complainant further shows that, upon the amended bill, amended answer, and replication, it is entitled to the decree without a determination of any of the matters in respect to which issues are raised by the amended answer of the defendant herein.'

The court granted this motion for the reasons which it had expressed in the opinion by it delivered on the allowance of the temporary injunction. A final decree was thereupon entered, perpetually enjoining the enforcement of the assailed ordinance. Because of the constitutional question the case was then appealed directly to this court.

Messrs. Newton D. Baker and D. C. Westenhaver for appellant.

[Argument of Counsel from pages 519-521 intentionally omitted] Mr. William B. Sanders for appellee.

[Argument of Counsel from Pages 521-523 intentionally omitted] Statement by Mr. Justice White:

As will appear by the statement just made, whilst two grounds under the Constitution of the United States were asserted in the bill as originally filled and as amended, the cause was in effect submitted to the court for decree upon one of the constitutional grounds alone,—that is, the alleged impairment of the obligations of certain asserted contracts. Conceding that the alleged rights based on the due process clause were not waived, but were merely reserved for future action, it is manifest that the motion of the complainant for decree on the face of the pleadings confined the controversy exclusively to the alleged contract rights, and we shall therefore treat the case as if it solely involved such rights. The facts necessary to a determination of the question of contracts and their impairment appear on the face of the pleadings, and may be summarized as follows:

On August 25, 1879, an ordinance was passed by the city council of Cleveland, granting to the Kinsman Street Railroad Company, an Ohio corporation, a renewal franchise for twenty-five years from September 20, 1879, to reconstruct, maintain, and operate its street railroad in and through certain streets of the city of Cleveland. The ordinance was duly accepted. A section of the ordinance was as follow:

'Sec. 7. Said company shall not charge more than 5 cents fare each way for one passenger over the whole or any part of its line, but said company may charge a reasonable compensation for carrying packages; the council, however, reserves to itself the right to hereafter increase or diminish the rate of fare as it may deem justifiable and expedient.'

In 1880 another Ohio corporation, known as the Woodland Avenue Railway Company, then operating a line of street railroad under several grants from the city of Cleveland, became, by purchase, the owner of the Kinsman Street Railroad, and thereafter operated such road.

The Woodland Avenue Railway Company, in May, 1883, was granted by ordinance the right to construct an extension of its line, and provision was made in the ordinance for a charge of one fare over the entire line, including the extension. The extension was built and operated as required by the ordinance.

At the time the ordinance extending the Woodland avenue road just referred to was passed there was in existence another Ohio corporation, styled the West Side Street Railroad Company, operating a line of railroad in Cleveland under a franchise granted by the city council of Cleveland for a term of twenty-five years from February 10, 1883. This road was independent of the Woodland Avenue Railway Company, and operated its cars chiefly upon the west side of the Cuyahoga river, the Woodland avenue line being upon the east side. There was no exchange of traffic between the roads by way of transfers, and each was charging a fare of 5 cents over its line. In 1885, with this condition of affairs existing, the roads named were consolidated as the Woodland Avenue & West Side Street Railroad Company, and the consolidated company became vested with all the property, rights, and privileges of the two constituent companies. The ordinance, the acceptance of which accomplished such consolidation, was as follows: 'An Ordinance to Fix the Terms and Conditions Upon Which the Railway Tracks of the West Side Street Railroad Company and the Tracks of the Woodland Avenue Railway Company and Said Companies May Be Consolidated.

'Sec. 1. Be it ordained by the city council of the city of Cleveland, that the consent of the city is hereby given to the consolidation of the West Side Street Railroad Company and the Woodland Avenue Railway Company on the following conditions:

'The said consolidated company to carry passengers through without change of cars by running all cars through from the workhouse on the Woodland Avenue Railway to the point on the West Side Street Railroad where Condon avenue crosses Lorain street, and, when practicable in the judgment of the council, to do likewise on the branches of the consolidated line, and that for a single fare from any point to any point on the line or branches of the consolidated road no greater charge than 5 cents shall be collected, and that tickets at the rate of eleven for 50 cents or twenty-two $1 shall at all times be kept for sale on the cars by conductors.

'Sec. 2. Said consolidated company shall be subject to all the liabilities, conditions, and penalties to which said several companies are liable; and said consolidated company and its tracks shall, at all times, be subject to the control, regulation, and supervision of the city council, to the same extent that the same several companies and their tracks are now liable.

'Sec. 3. This ordinance shall take effect and be in force from and after its passage and legal publication, the filing with the city of a written agreement accepting and agreeing to the terms thereof, signed by the proper persons for the companies consolidated, and the payment to the city of the expenses of printing and publishing this ordinance.

'Passed February 16, 1885.'

By ordinance dated April 8, 1887, duly accepted, the Woodland Avenue & West Side Street Railroad Company was authorized to lay an additional track and extend its line of railroad. The first section of the ordinance reads as follows:

'Sec. 1. Be it ordanined by the city council of the City of Cleveland, that the Woodland Avenue & West Side Street Railroad Company, its successors and assigns, be and the same is hereby authorized and empowered to lay an additional track in Franklin avenue, between Pearl street and the westerly line of Franklin circle, and to extend its line of railroad to Franklin avenue from the westerly line of Franklin circle to Kentucky street, as a single track railroad, and connect with the tracks of said company in Kentucky street, as shown on a plan accompanying the petition of said railroad company, and referred to the board of improvements March 14, 1887, and to equip and operate said extension as herein provided, but on the express condition that no increase of fare shall be charged by said railroad company on any part of its main line or on said extension, and so that but one fare, not to exceed 5 cents, shall be charged between any points on said company's main line or extension, including the extension herein granted, and said company shall sell tickets on its cars as follows: Eleven (11) tickets for 50 cents, and twenty-two (22) for $1. And the right herein granted shall terminate with the present grant of the main line, to wit, on the 10th day of February, 1908.'

By ordinance dated August 12, 1887, duly accepted, the Woodland Avenue & West Side Street Railroad Company was authorized to build, equip, and operate an extension of...